New mobile measure ineffective

Korean consumers have more freedom in choosing their cellphones depending on their needs and budgets now that the devices have been made available at large stores and online retailers after authorities lifted the three carriers’ oligopoly on sales starting this month. The new rule also allows consumers to change their handsets or phone numbers by swapping their universal subscriber identity module (USIM) card, a memory chip.

Prior to this, phones could only be bought at the carriers’ respective retail stores, which just sold models they had authorized. Now supermarkets, Web sites and stores do not have to pair license contracts with phone sales, except for those that have been reported missing or stolen.

But the new measure by the Korea Communications Commission has hit a snag due to resistance from KT, SK Telecom and LG U+, as well as from the handset manufacturers themselves. They have profited so far by establishing de facto cartels that have limited consumers’ choices.

They are especially reluctant to start ceding their market share of these sales with the ongoing push to promote fourth-generation (4G) long-term evolution (LTE) smartphones as a relatively new cash cow. LTE smartphones, which are expensive to buy and come with high service fees, are in hot demand these days despite not having nationwide coverage. However, such handsets have quickly begun to dominate the local smartphone market because operators and their retail stores have campaigned hard to promote them. They also benefit from removing other models from their displays - a ruse that won’t work under the new system.

Yet despite the more open market, few supermarkets and convenience stores have begun stocking cellphones as they feel they cannot compete with retail stores supported by the carriers and manufacturers. The latter set the costs high but offer carriers subsidies and financial rewards through sales promotions to make sure both sides win, often at the expense of the consumer. This means malls and marts will need to secure similar deals to keep pace - but there is little chance of that happening.

The carriers also resist service discounts for users who buy phones outside their retail stores, and won’t offer after-sales services. As such, the new measure will hardly be of any use.